JBS N.V. (JBS): A Strong Buy in the Protein Sector Amid GAAP Harmonization and Earnings Resilience

In the volatile world of global agriculture and food production, JBS N.V. (JBS) stands out as a rare combination of operational discipline, strategic foresight, and undervaluation. As the world's largest meat processor, JBS has navigated cyclical headwinds in beef and pork markets while simultaneously aligning its financial reporting with U.S. GAAP standards to enhance transparency. This alignment, coupled with robust earnings resilience and compelling valuation metrics, positions JBS as a compelling long-term investment in a competitive sector.

GAAP Harmonization: A Foundation for Investor Confidence

JBS's recent adoption of ASU 2023-06, a key update to U.S. GAAP disclosure requirements, underscores its commitment to harmonizing financial reporting with global standards. This FASB update, issued in October 2023, eliminates redundant disclosures and aligns U.S. GAAP with SEC regulations, ensuring consistency for multinational corporations like JBS. By integrating these changes, JBS has streamlined its financial statements, reducing ambiguity for investors and analysts. For example, the company now provides clearer segment disclosures under ASU 2023-07, including quarterly updates on segment assets, which had previously been reported annually. This level of detail allows stakeholders to assess the performance of JBS's diverse operations—ranging from beef and pork to prepared foods—with greater precision.

The alignment with U.S. GAAP also extends to climate-related disclosures. While JBS has faced scrutiny over environmental practices, its adoption of ASU 2023-06—which mandates more detailed climate risk reporting—demonstrates a proactive approach to transparency. By disclosing how climate factors impact its supply chain and financial position, JBS addresses investor concerns while aligning with global ESG trends. This strategic move not only mitigates reputational risks but also enhances credibility in a sector increasingly scrutinized for sustainability.

Earnings Resilience: Navigating Cycles with Discipline

JBS's Q2 2025 financial results highlight its ability to thrive in a cyclical industry. Despite a 3.87% revenue miss, the company achieved a 9% year-over-year increase in net sales, reaching $21 billion. This resilience stems from disciplined cost management, product mix optimization, and swift containment of the avian flu outbreak in Brazil. More impressively, JBS's EBITDA surged by 478.8% year-over-year to $7.72 billion (LTM), reflecting strong operational leverage.

The company's strategic investments in prepared foods further bolster its earnings potential. JBS is allocating $1.335 billion to U.S. facilities, including a $400 million Georgia-based plant that will become its largest bacon and sausage production site. These investments target the convenience-driven food market, a segment growing at double-digit rates. Analysts project a 42% upside potential for JBS, driven by improving EBITDA margins and the normalization of pork and beef cycles by 2027–2028.

Undervaluation: A Compelling Entry Point

JBS's valuation metrics paint a picture of a company trading well below its intrinsic value. Its trailing P/E ratio of 7.65 is a stark contrast to the 37.93 average for the Consumer Cyclical sector, indicating significant undervaluation relative to earnings power. Similarly, its EV/EBITDA ratio of 4.88 is below the 8.5 industry average for agribusiness and food producers, reinforcing its attractiveness.

The company's balance sheet further supports its undervaluation thesis. JBS maintains a net leverage ratio of 2.27x, well within its long-term target and significantly lower than the 7.71 average for the Financial Sector. This low leverage, combined with a $400 million share repurchase program and consistent quarterly dividends of $200 million, signals confidence in its capital structure and commitment to shareholder returns.

Strategic Positioning in a Competitive Market

JBS's competitive edge lies in its ability to balance short-term profitability with long-term innovation. While the beef and pork sectors face cyclical pressures, JBS's pivot to prepared foods—a segment accounting for 20% of its revenue—positions it to capture growth in convenience-driven markets. This diversification, combined with its GAAP-aligned transparency and disciplined capital allocation, creates a robust foundation for sustained earnings growth.

Conclusion: A Strong Buy for Long-Term Investors

JBS N.V. is a rare combination of undervaluation, earnings resilience, and strategic alignment with global financial standards. Its adoption of U.S. GAAP updates like ASU 2023-06 enhances transparency, while its operational discipline and strategic investments in high-growth areas ensure long-term value creation. For investors seeking exposure to the protein sector with a margin of safety, JBS offers an attractive entry point. As the company navigates the normalization of commodity cycles and expands its prepared foods footprint, its current valuation metrics suggest significant upside potential.